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What Is Daedalus Wallet

Published 29.1.2024

If you install the Daedalus wallet on your computer, the Cardano node will be installed at the same time. What is the difference between Daedalus and light wallets like Yoroi, Lace, Eternl, Nami, and many others? We will explain the basic differences in the article.

Wallet and full node

Every blockchain wallet must be connected to a full node to interact with the blockchain.

The wallet is just a user interface allowing users to see how many coins and tokens they own. Furthermore, wallets allow them to submit transactions. In the case of Cardano, the wallet is used to create a special transaction with a delegation certificate that delegates ADA coins to the chosen pool.

The wallet needs to read the data stored in the blockchain and further change the state of the blockchain through transactions. All valid transactions will be included in the block. Each new block added to the blockchain changes the current state of the ledger.

The user can either run his node to which the wallet is connected locally, or his wallet can connect to a remote node operated by someone else (a third party).

When installing the Daedalus wallet, the Cardano node is automatically installed on the local computer. Daedalus is connected to the node via Inter-Process Communication (IPC).

When you open Daedalus, the Cardano node will automatically start as well. When you close the wallet, the Cardano node is shut down.

Having your node on your computer means that there is no need to trust a third party. Through Daedalus, it is possible to interact directly with the blockchain network.

So-called light wallets connect to a remote Cardano node operated by a third party. The first light wallet in the Cardano ecosystem was Yoroi, which connected to a Cardano node operated by Emurgo.

Synchronization of the blockchain

The full node downloads new blocks and validates them (including all transactions). These blocks are subsequently added to the local version of the ledger. This means that operating a full node requires a sufficiently large storage. In addition, there are requirements for computing power and a good Internet connection.

If you run a full node for the first time, it must download the entire blockchain history from peer nodes and verify it. This can take several hours (or even days) depending on your computing power and internet connection.

This process is usually called synchronization.

The node will gradually reach the point where it knows the entire history (all blocks) and can start validating the current blocks.

If a full node runs permanently, it adds a new block to the blockchain every 20 seconds. A connected wallet can instantly provide users with up-to-date information and allow them to submit new transactions. This is how most light wallets behave because third parties have a Cardano node running all the time.

Daedalus can do it too, but only if you keep your wallet open all the time and never turn off your computer. This may be associated with extra costs.

Many users turn off their computers or close their wallets when they don't need them. In this case, the Cardano nodes will also shut down. This means that there is no synchronization during this time.

When users open Daedalus after some time, a synchronization must first take place. A Cardano node must download and validate all new blocks since it was last shut down. Only then will the Daedalus wallet have up-to-date data on the state of the blockchain.

The longer the Cardano node remains off since the last sync, the longer the sync will be.

Some users open Daedalus from time to time even when they don't need the wallet (after a few days) to sync.

Desktop computers are on the decline. Most people turn off their laptops (or have them go into sleep mode) at night, often for ecology. Especially young people use mobile phones and may not have their computers at home. For decentralization, this is a challenge we have to deal with.

Daedalus or Light Wallet?

If you insist on trust-less interaction with the Cardano network and don't want to trust anyone, you must run a full node. The easiest route is Daedalus. In this case, you must have sufficient computer resources for a full node and expect that synchronization will take place.

Many users do not want to run a full node for various reasons. They prefer to use light wallets.

Light wallets take up almost no space on the local disk. They immediately display the current data (funds) and allow you to send a transaction without waiting (without synchronization).

Thousands of users can connect to third-party servers at once. Your comfort depends on how much the third party invests in the infrastructure. Users of light wallets must know that the connection to the Cardano network is dependent on a third party.

Is Daedalus helping the network?

It should be noted that the Cardano node that is installed together with the Daedalus wallet runs in passive mode. This node does not mint new blocks. It only validates new transactions through the blocks it receives.

If you run the Daedalus wallet on your laptop, you will be maintaining your version of the ledger. However, you do not help the network with anything related to minting blocks, distributing user transactions or temporarily storing them in the mem-pool.

An active Cardano node requires an extra layer of protection, which consists of installing usually 2 relay nodes. Block producer nodes (pools) are thus hidden behind relay nodes. This setup is complicated for many lay users and requires a certain infrastructure that home users do not normally have.

Conclusion

From my point of view, people should stick to the principles of decentralization. Third-party independence is one of them. That's why people should run their full node, even though it's less practical for most users.

It cannot be assumed that people will buy an extra computer because of decentralization. SPOs know how to reliably operate block-producer nodes in a home environment, or they can use cloud services.

History shows that users are not interested in running full nodes. Only about 5% of users use self-custody wallets. In the Bitcoin network, only 0.002% of people run their full node. In the case of Cardano, the statistics may very likely look similar (a relatively large number of nodes and a smaller number of ADA holders).

It is obvious where the crypto industry is headed. Users must have light clients with the same security as full nodes. Mithril is one of the technologies that can move us towards this.

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